Shippers and railroads address service issues, potential solutions in Canada

The Canadian Fertilizer Institute, Canadian Steel Producers Association, Chemistry Industry Association of Canada, Forest Products Association of Canada and Mining Association of Canada are urging railroads to work with their organizations on a customer-based approach to improve rail service in all sectors.

The national trade associations are concerned that a sector-by-sector approach will not address broader service issues across the system, officials from the five organizations said in a joint press release. For example, the recently proposed Fair Rail for Grain Farmers Act would only address a grain transportation backlog in Canada amid a record crop.

"We feel that addressing one sector's concerns without considering the broader supply chain will result in a patchwork of policies that don't solve any fundamental issues," said Mining Association of Canada President and Chief Executive Officer Pierre Gratton. "This could ultimately jeopardize Canada's economic growth."

Shippers, railroads and the government need to take a holistic look at transportation challenges and develop sustainable commercial solutions that are good for all sectors, adds Roger Larson, president of the Canadian Fertilizer Institute.

The organizations' long-term goal: to work with supply-chain partners to foster collaboration and right-size the transportation system. The trade associations plan to provide the federal government with recommendations for improving rail service during the Canada Transportation Act review later this year.

In the meantime, Canadian Pacific and CN continue to oppose the Fair Rail Act, which would mandate the amount of grain railroads must move each week and extend interswitching distances in Saskatchewan, Alberta and Manitoba.

Interswitching would worsen the situation for the movement of Canadian grain to markets, slowing down the grain supply chain due to increased handlings and further constraining capacity, CP President and Chief Operating Officer Keith Creel told the Standing Committee on Agriculture yesterday.

"The reality is the current grain supply chain, of which rail is only one component, cannot move these extraordinary volumes over this short period of time," he said. "We need solutions that will increase throughput of grain from farm to ship."

CP's efforts to transport more grain — the Class I moved 15 percent more Western Canadian grain in February and 20 percent more in March versus last year — need to be matched by other partners in the supply chain, Creel believes.

"We should not allow rail cars to sit, waiting to be loaded or unloaded, when they should be cycling back to the Prairies or to the ports," he said.

CP is asking all supply-chain partners to engage in a collaborative dialogue to determine immediate solutions that will create longer-term capacity in the grain supply chain, Creel said.

CN concurs. The Class I can only meet its service commitments if all other key players in the supply chain are equally held accountable for their performance, said President and CEO Claude Mongeau earlier this week.

"One of the biggest root causes of the challenge we face is a lack of coordination across the supply chain and growing pains from new grain marketing strategies following the change in role of the Canadian Wheat Board [CWB]," he said. "Despite the fact that CN will soon have moved more grain than ever before in its history crop-to-date, the benefit of its strong performance does not appear to be flowing to farmers as it did before. The faster we can ramp up tonnage, the quicker we will be able to mitigate the effects of the grain backlog for all Canadian farmers."

Meanwhile, the CWB has announced plans to build a state-of-the-art grain elevator in Bloom, Manitoba — the first time the board will construct a grain-handling facility. To be served by CN, the elevator is expected to be ready to receive grain for the 2015 harvest.

The facility will feature industry-leading rail-car loading times through a 130-car loop track that will facilitate fast and efficient car loading at up to 60,000 bushels per hour, said CWB officials in a press release. The elevator also will be able to store 33,900 metric tons of grain.

"Customer service was top-of-mind when choosing to invest in Bloom as the site for our first elevator," said CWB President and CEO Ian White. "As one of the highest efficiency elevators in Western Canada, farmers will be able to pull in and out of our elevator yard in record time."